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Tuesday, September 8, 2009

This is Marketing Management MBA assignment of SMU. The subject code is MB0030 which is related to marketing management assignment. Question of assignment is – “Analyze the business portfolio of a beverage company using BCG matrix”.

Now, follow to the answer for “Analyze the business portfolio of a beverage company using BCG matrix” below -

The current business portfolio of the company is analyzed by the business in which it operates. To make it clearer, let me take an example of ITC group. The company operates in FMCG, hotels, paper boards, specialty papers and packaging and agribusiness. These business are independent from each other and here their mission and objectives separately. These subsidiaries of organization or called as strategic business units (SBU).

Strategic business unit: The unit of the company that has separate mission and objectives and that can be planned independently from other business.

Strategic planning models used in assessing the existing business.

BCG matrix: (Boston Consultancy Group) BCG matrix: This model is used to identify company’s SBU’s position in the market.

This model identifies the SBU’s strength, weakness, opportunities and threats on the basis of market growth rate and relative market share.

The model is also known as growth share matrix.

Axis components:

1. Market growth rate: The rate at which market is growing
2. Relative market share: Market share of the SBU divided by the market share of the largest competitor.

Model Components:

Star: This category represents the high market share and high industry growth. SBU’s in this category require large investment to defend their position. SBU will return as cash cow after some time.

Cash Cows: This category represents the low growth rate and high market share which is the characteristic of SBU operating in mature industry. Here company needs less investment to hold their position. Hence it generates more cash or in management terms we say cash cow can be milked.

Question Mark: This category represents high market growth and low market share. SBU’s in this category has tow options, either to invest heavily and bring them to star position or divest/liquidates from that position.

Dogs: SBU’s in this category less cash for the company as it operates in low growth and low market share usually companies will not invest is this category and try to liquidates or divest.

BCG Matrix

Industry growth rate: 24%
Company growth rate: 50%


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